MNI BRIEF: Third Mandate Flows From Dual Mandate Success-Miran

Federal Reserve Governor Stephen Miran said Tuesday the central bank needs to lower interest rates and that stable long term interest rates flow from success in achieving the central bank's dual mandate goals. 

"Most people think that achieving moderate, long term interest rates will naturally come out of achieving maximum employment and stable prices," he said in Q&A at an event hosted by the Managed Funds Association. "I agree with that. I could imagine there being sort of tail scenarios of the world in which that's not the case. But I don't think that any of those tail scenarios are remotely describing a reality that I see now, or that I would expect to see." 

Miran caused some confusion among investors when he cited a third mandate in his Senate confirmation hearing that the Fed must also pursue moderate long-term interest rates. "I wasn't trying to reinterpret the Fed's monetary policy framework. In doing so, I was just being complete and caring about democracy and the rule of law and what Congress has actually tasked the Fed with," he said Tuesday. (See: MNI INTERVIEW: Fed Right To Remain Cautious On Rate Cuts-Kohn) 

Miran said he is more sanguine on the inflation outlook than many others and additional monetary policy restrictiveness poses risks going forward as the neutral rate has come down. He said there is no replacement for official economic statistics from the U.S. government and he "would remain optimistic that we will have the data by the time that we have to actually make our decision"  at the FOMC's October 28-29 meeting.